According to Moody’s, after growing by 6.7% in 2017, the highest rate in six years, the Vietnamese economy will continue to sustain growth at 6.7% this year.
Vietnam’s positive outlook is supported by strong exports of electronics and garments, along with the recovery of agriculture and the stable flow of foreign investment.
Furthermore, a robust domestic market will also help with economic growth, Moody’s said.
The Moody’s report noted that trade continues to be the driver of Vietnam’s growth, adding that advantages such as cheap labour costs and a young workforce have made Vietnam an attractive destination to foreign manufacturers.
Nevertheless, global trade tensions and a stronger US dollar have adversely affected Vietnam’s financial market, though the impact is smaller than in other emerging markets.
The benchmark VN-Index fell more than 20% since the peak in April but Vietnam remains one of the few active emerging markets.
In the meantime, the Vietnamese dong has weakened by 2.7% against the US dollar since the start of 2018, but the figure is not worrying if compared with the currencies of other emerging markets.
Current account surplus and large foreign reserves will continue to see Vietnam in a better position than other emerging markets which are facing worsening current account deficit.
Therefore, Moody’s expects the State Bank of Vietnam to maintain a neutral stance towards the end of the year.
In addition, effective macroeconomic policies and further structural reforms are two important factors to Vietnam’s continued growth in the medium and long term.
